RANGE IMPACT, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Cautionary Statement The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Unaudited Condensed Financial Statements and the related notes thereto contained in Part I, Item 1 of this Quarterly Report. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2024 filed on March 31, 2025, and the related audited financial statements and notes included therein. Certain statements made in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “intend,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, which may cause our or our industry’s actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. These risks and uncertainties include: general economic and financial market conditions; our ability to obtain additional financing as necessary; our ability to continue operating as a going concern; any adverse occurrence with respect to our business: other factors beyond our control; and the other risks described under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 31, 2025. Although we believe that the expectations and assumptions reflected in the forward-looking statements we make are reasonable, we cannot guarantee future results, levels of activity or performance. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed by any forward-looking statements. As a result, readers should not place undue reliance on any of the forward-looking statements we make in this report. Forward-looking statements speak only as of the date on which they are made. Except as required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason. Company Overview Range is a public company dedicated to improving the health and wellness of people and the planet through a novel and innovative approach to impact investing. We are focused on developing long-term solutions to environmental, social, and health challenges, with a particular focus on acquiring, reclaiming and repurposing mine sites and other undervalued land in economically disadvantaged communities throughout Appalachia. We seek to take an opportunistic approach to impact investing by leveraging our competitive advantages and looking at solving old problems in new ways. We seek to thoughtfully allocate its capital into strategic opportunities that are expected to make a positive impact on the people-planet ecosystem and generate strong investment returns for our shareholders. Our corporate headquarters is located in Cleveland, Ohio, with an additional office in Fola, West Virginia. As of May 15, 2025, we employed 18 full-time employees. In addition, we have, from time to time, engaged various consultants and professional service firms to provide us with flexible and experienced resources to advance our corporate objectives in order to maintain a cost-effective overhead structure. We strive to instill a corporate culture of honesty, integrity and respect while advancing our mission of doing well by doing good. Impact Investing Strategy Our impact investing strategy aims to improve the health and wellness of people and the planet, while also generating long-term sustainable financial returns for our shareholders. We believe that doing well and doing good are not mutually exclusive, and that an impact investing strategy can balance the environmental, social and economic needs of people and the planet while also generating attractive risk-adjusted financial returns for shareholders. Our impact investing strategy provides an opportunity for our dedicated team to address pressing environmental, social and economic challenges, such as air and water pollution, educational inequality and economic disparity, and climate change, through the development and implementation of innovative and creative solutions. By actively directing investment capital towards businesses that are working to create positive environmental, social and economic outcomes, we believe that our impact investing strategy can contribute to an improved people-planet ecosystem and a healthier and happier way of life. We have a particular interest in providing environmental and social solutions in economically-disadvantaged regions of the United States. Initially, the Company is targeting the Appalachian region, which is home to communities with some of the most disadvantaged income, education and employment demographics in the United States. Our ambitious strategy is to acquire large mine sites burdened by substantial legacy reclamation obligations and use our team and resources to perform the requisite reclamation activities and obtain full bond release, thereby unlocking the underlying value of the land and creating a critical catalyst for sustainable, long-term economic development in the disadvantaged coal communities of Appalachia. 18 Operating Business Segments Our two operating business segments are Range Land and Range Services. Range Land Range Land, LLC, an Ohio limited liability company (“Range Land”), is a wholly-owned subsidiary focused on acquiring former mine lands with the goal of reclaiming and repurposing the sites for non-fossil fuel uses, including commercial, industrial, residential and recreational developments, with a particular focus on renewable energy facilities, innovative agricultural installations, and projects focused on improving the quality and condition of our air, land and waterways. According to industry estimates, Appalachia contains nearly one million acres of abandoned, idled and non-performing mine sites that are burdened with significant land reclamation and water restoration obligations. Many of these troubled mine sites are subject to mining permits and associated reclamation bonds, which as a result, prevents the land from being repurposed for non-mining uses until the land has been reclaimed and the permits and bonds have been released by the applicable state’s environmental protection department. Water quality is a particularly challenging issue since a permit can only be released if the site has at least 12-months of compliant water samples without active chemical treatment, which heightens the need for water restoration solutions to help transition former mine land to economically viable non-mining uses. The Company has assembled the internal resources and capabilities to reclaim land, restore waterways, install innovative water treatment solutions, and secure mine sites to protect the significant historical investment in infrastructure. In addition, the Company has expertise in the permit and bond release process, which is a critical to unlocking the underlying value of a former mine land for non-fossil fuel uses. Range Land is actively reviewing several mine sites throughout Appalachia to acquire, reclaim and repurpose in order to improve the land and create non-fossil fuel economic development opportunities for disadvantaged local coal communities. In September 2023, Range Land, through its wholly-owned subsidiary, CLV Azurite Land, LLC (“CLV Azurite”), acquired over 1,700 acres of surface interest at an idled mine complex in West Virginia. CLV Azurite is in active discussions with the holder of the permits and bonds associated with the acquired land in order that the acquired surface acreage can be repurposed for alternative non-fossil fuel uses. CLV Azurite is in concurrent active discussions with two experienced and well-capitalized solar developers to convert the former mine land into a large solar energy facility on a majority of the acquired surface acreage, as well as additional acreage for commercial, industrial, recreational and residential development pursuant to which the solar developer would pay a negotiated amount on a per acre basis. On March 31, 2025, the Company, through its wholly-owned subsidiary, Range Sky View Land, LLC, acquired 120,154 acres of fee, surface and mineral interests at the Fola mine complex (“Fola Mine”) located in Clay and Nicholas Counties, West Virginia pursuant to which the Company acquired 15 mining permits with an estimated reclamation obligation of $29,282,126 and assumed an obligation to manage an additional 21 mining permits with an estimated reclamation obligation of $13,796,945. As a result, on March 31, 2025, the Company recorded AROs of $43,079,071 related to the Fola Acquisition and capitalized an equal amount onto the fair value of the acquired land on that same date. The Company also assumed two coal royalty contracts and one 25-year solar lease with a multi-national corporation for the development of a large-scale solar project located on more than 1,500 acres at the Fola Mine. Range Services Range Services is our operating business segment that provides environmental and operational support services to help reclaim and repurpose former mine land into next-generation uses. All of the Company’s reclamation, water treatment and security employees, equipment and trucks, and technological innovations are classified within the Range Services business segment. Range Services is dedicated to reclaiming and repurposing land owned by the Company and does not currently provide any reclamation, water treatment or security services to third-parties. Reclamation support services on mine sites includes grading, recontouring, revegetation, erosion control, and other activities necessary to meet federal and state post-mining land use requirements. Water treatment services include the operation and maintenance of passive and active treatment systems designed to manage and treat mine-impacted water, including acid mine drainage, in compliance with applicable environmental permits. Range Services is also responsible for collecting water samples, coordinating testing with certified laboratories, and treating water with chemicals and other more innovative solutions, such as the Company’s proprietary biochar water filtration products and system currently in development. Range Services also provides physical site security, access control, and risk mitigation activities to ensure the safety, compliance, and regulatory protection of the Company’s land assets. Competition Our Company is focused on a large and growing marketplace for impact investing initiatives, and therefore, is anticipated to face competition from a variety of operating businesses and investment funds who are developing similar business plans and operating strategies to satisfy the increasing demands of these types of investments in the marketplace. In many cases, these competitors are larger and better capitalized operating businesses and investment funds. Our Company competes on the basis of a number of factors, including our geographic focus on Appalachia, access to mission-driven energy-transition capital, access to impact investing opportunities, strategic relationships with reclamation bond insurance companies, recruitment and retention of key personnel, market share with key customers, and supply relationships with critical vendors. Our ability to continue to compete effectively in our businesses will depend upon our ability to attract new employees and retain and motivate our existing employees. 19 Results of Operations Three Months Ended March 31, 2025 and March 31, 2024 The Company’s revenue for the three months ended March 31, 2025 was $695,701 and its gross profit was $3,851. The Company’s revenue for the three months ended March 31, 2024 was $3,909,893 and its gross profit was $18,854. The significant decrease in revenue is primarily a result of management’s decision to exit the mining business and the AML reclamation business in 2024. For the three months ended March 31, 2025, general and administrative expenses were $559,147, compared to $943,901 incurred for the three months ended March 31, 2024 (a decrease of $384,754). General and administrative expenses generally include corporate overhead, salaries and other compensation costs, financial and administrative contracted services, legal and audit fees, other professional and consulting fees, insurance, marketing, and travel expenses. The largest decrease in general and administrative expenses for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, was attributable to labor and benefit costs of $147,023, insurance costs of $120,313, professional and legal fees of $94,225, and utilities of $20,000. For the three months ended March 31, 2025, the Company incurred net other income in the amount of $5,654,923, compared to total net other expense of $157,153 recorded for the three months ended March 31, 2024 (an increase of $5,812,076). This increase in net other income was attributable to a gain on bargain purchase of $5,602,484, other income of $83,627, gain on sale of fixed assets of $59,680, and lower interest expense of $84,390. Net income for the three months ended March 31, 2025 was $5,099,627 compared to a net loss of $1,213,840 for the three months ended March 31, 2024 (an increase of $6,313,467). Liquidity and Capital Resources As of March 31, 2025, the Company had total current assets of $1,208,068, comprised of: (i) cash of $252,695; (ii) accounts receivable of $153,938; (iii) equipment held for sale of $733,613; and (iv) prepaid expenses of $67,822. As of March 31, 2025, the Company had total current liabilities of $3,067,577, consisting of: (i) outstanding amounts on lines of credit of $2,000,000; (ii) accounts payable of $444,419; (iii) accrued expenses of $148,377, and (iv) the current portion of long-term debt of $474,781. As a result, as of March 31, 2025, the Company had negative working capital of $(1,859,509). As of December 31, 2024, the Company had positive working capital of $749,437. As of March 31, 2025, the Company had long-term assets of $53,240,251, comprised of: (i) land, including asset retirement cost, of $52,648,968, (ii) net equipment assets of $585,669; and (iii) deposits of $5,614. As of March 31, 2025, the Company had long-term liabilities of $44,842,220, comprised of (i) asset retirement obligations of $43,079,071 and (ii) long-term debt, net of current portion of $1,763,149. As of December 31, 2024, the Company had long-term assets of $1,899,669, comprised of (i) land of $1,008,897 and (ii) net equipment assets of $890,772. As of December 31, 2024, the Company had long-term liabilities of $1,814,701, comprised of long-term debt, net of current portion. Sources of Capital Based on the Company’s current corporate strategy, we expect our general operating expenses to be substantially offset by royalty income generated by Range Land. Based on the Company’s current cash balance of $252,695 and no current availability under its revolving credit line, the Company may not have sufficient funds to operate its business over the next 12 months. If additional capital is needed in excess of our current capital resources, we will explore financing options to accelerate the funding and execution of our growth strategy and shareholder value creation plan. 20 Our estimated total net cash flow for the 12-month period ending March 31, 2026 could decrease if we encounter unanticipated lower revenues and higher expenses in connection with operating our business as presently planned. In addition, our estimates of the amount of cash necessary to fund our business may prove to be too low, and we could spend our available financial resources much faster than we currently expect. If we cannot raise the capital necessary to continue to develop our business, we will be forced to delay, scale back or eliminate some or all of our proposed operations. If any of these were to occur, there is a substantial risk that our business would fail. Until such time as the Company is cash flow positive, we expect to continue funding our operations, at least in part, through equity and debt financings. However, sources of additional funds may not be available when needed, on acceptable terms, or at all. If we issue equity or convertible debt securities to raise additional funds or to fund, in whole or in part, acquisitions in furtherance of our business strategy, our existing stockholders may experience substantial dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. If we incur additional debt, we would incur additional interest expenses, and assuming those loans would be available, it would increase our liabilities and future cash commitments. Moreover, regardless of the manner in which we seek to raise capital, we may incur substantial costs in those pursuits, including investment banking fees, legal fees and other related costs. Net Cash Provided By (Used In) Operating Activities For the three months ended March 31, 2025, net cash used in operating activities was $(428,101), comprised of: (i) net income of $5,099,627; (ii) non-cash depreciation of $84,783; (iii) add-back of the non-cash bargain purchase gain of $5,602,484; (iv) a gain on asset disposals of $59,680; (v) non-cash vested stock option expense of $4,490; (vi) an increase in current assets of $206,256; and (vii) a decrease in current liabilities of $161,093. For the three months ended March 31, 2024, net cash used in operating activities was $(1,113,045), comprised of: (i) net income of $(1,213,840); (ii) non-cash depreciation of $638,435; (iii) non-cash vested stock option expense of $4,490; (iv) an increase in current assets of $827,087; and (v) a decrease in current liabilities of $1,369,217, Net Cash Provided By (Used In) Investing Activities For the three months ended March 31, 2025, net cash provided by investing activities was $280,000, comprised of $380,000 of proceeds from the sale of equipment, partially offset by $100,000 for equipment purchases. For the three months ended March 31, 2024, there was no net cash provided by or used in investing activities. Net Cash Provided By (Used In) Financing Activities For the three months ended March 31, 2025, net cash provided by financing activities was $233,510, comprised of $600,000 from the sale of common stock, partially offset by the repayment of long-term debt of $366,490. For the three months ended March 31, 2024, net cash used in financing activities was $(396,057), comprised entirely of the repayment of long-term debt of $396,057. Off-Balance Sheet Arrangements We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to stockholders. 21 Critical Accounting Policies Our financial statements and accompanying notes included in this report have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) applied on a consistent basis. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from the estimates made by management. We believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements included in this report: Use of Estimates and Assumptions The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. The more significant estimates and assumption by management include, among others, assumptions used in valuing assets acquired in business acquisitions, reserves for accounts receivable, assumptions used in valuing equity instruments issued for services, the valuation allowance for deferred tax assets, accruals for potential liabilities, and assumptions used in the determination of the Company’s liquidity. Actual results could differ from those estimates. Business Combinations Business combinations are accounted for using the purchase method of accounting under ASC 805, “Business Combinations.” This method requires the Company to record assets and liabilities of the businesses acquired at their estimated fair values as of the acquisition date. Any excess of the cost of the acquisition over the fair value of the net assets acquired is recorded as goodwill. Determining the fair value requires management to make estimates and assumptions including discount rates, rates of return on assets, and long-term sales growth rates. Revenue Recognition The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers”. The core principle of the revenue standard is that a company should recognize revenue by analyzing the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when, or as, each performance obligation is satisfied. The Company primarily invoices customers and recognizes revenue on a periodic basis for equipment and labor hours provided to a customer on a particular job based on an agreed-upon hourly rate sheet or a fixed amount for a project. The Company also invoices customers and recognizes revenue for equipment mobilization fees and materials and supplies required to complete a project. The Company invoices for the sales of chemicals and recognizes revenue when the products are delivered to the customer’s designated site. Costs for equipment, labor and chemicals are generally expensed as incurred since the projects are generally short-term and not subject to a contract. The Company also invoices customers for the provision of environmental security services on an agreed-upon hourly rate for each project. All revenue is recognized at a point in time. The Company recognizes revenue from contracts for financial reporting purposes over time. Progress toward completion of the Company’s contracts is measured by the percentage of cost incurred to date compared to estimated total costs for each contract. This method is used because management considers total cost to be the best available measure of progress on contracts. Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change significantly within the near term. 22 Stock-Based Compensation The Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting based on ASC 718, “Compensation - Stock Compensation” whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on the straight-line basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. Recent Accounting Pronouncements Please refer to Footnote 1 of the accompanying financial statements for management’s discussion of recent accounting pronouncements. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not Applicable.